Busted: Bankers and The Global Economy

October 5, 2008

U.S. Government Plans New Cyber Security

To highlight National Cyber Security Month, U.S. Homeland Security Secretary Michael Chertoff expressed his desire for an aggressive computer infrastructure that would provide an aggressive defense, much like an anti-aircraft weapon.

The initial effort of the federal government, often referred to as Einstein, was designed protect the government computer network from internet and computer attacks by limiting the number of portals to government computer systems and searching for signs of cyber tampering.

Einstein 2.0 is a new system being tested to detect computer intrusions as they happen in real time. How strange when Chertoff announced that would like to see a program that looked for early indication of tampering and stop that tampering before any further efforts could be made. Isn’t that what Einstein 2.0 is all about? Apparently, even Einstein 2.0 is not strong enough medicine for Chertoff.

For years, government information has been compromised. Notable was an event made public in 2003 where Chinese government hackers routinely entered National Security Computers. Chertoff is fearful of terrorist activity that could “cause potentially very serious havoc” to government systems. This says nothing of the potentially secret and private data that would be lost to an enemy attacker forever. He plans on making the investment now instead of waiting for a catastrophe.

He admits that since the internet is seen as a place of freedom and privacy, coming in and taking over the national internet would create a great deal of discomfort. “We are deliberately going slowly because we recognize that the issue of government involvement in the Internet is fraught with all kinds of potential concerns and potential anxieties about not having the government have a big-foot impact on an area of communication and commerce that has traditionally been viewed as really independent and free.”

The Bush administration released a new National Cyber Security Initiative in January 2008 that spelled out increased security for federal government computer systems. Current anti-virus and firewall protection is not seen as robust enough. The other Bush plan in the security initiative is to develop cooperative measures with the private sector to address threats to businesses. This includes not only protection from hackers, but also from counterfeit parts, which an individual or another nation could use to create computer vulnerabilities in the United States.

One item is being publicly overlooked. The reality is that with the current complexity of programs today, a system could be easily compromised on the inside by savvy programmers. Sending computer and data work overseas as well as using foreign workers with temporary visas are highly questionable in a time when security seems to be the chief concern of some governmental authorities. Yet, that is exactly what U.S. industry and government continues to do, subverting the U.S. employment market with the pretense of saving money and failing to mandate secure procedures. How will a program that is written in a foreign land by foreign programmers meet the real security test. The best security program can be easily compromised by internal or planted terrorists. Keep in mind that one man’s terrorist is another man’s hero.

The U.S. government is clearly interested in stepping up surveillance and protection in the name of security. Do we trust them enough to do the job right using taxpayer money or does the U.S. government have any business meddling with internet any more than they do now? ~ E. Manning

Related articles:

New Surveillance Law Threatens American Privacy
Does Government Surveillance Harm Society?
Surveillance and National Security: Where is America Going?
Domestic Spying Threat Continues

October 2, 2008

Bailout: And Now the Rest of the Story

And now the rest of the story. The U.S. Senate and House have approved and passed the latest U.S. bailout miracle. How will the nation benefit? The rest of the story is there will be very little difference except that the current power structure will remain in place. That, America is exactly what all the hubbub at the top of the U.S. government is all about. The long-term details are of little importance to politicians, bankers and especially not to the central bankers.

Within a month or two, Hank Paulson will buy $250 billion in junk assets using mainly guesswork since there is little transparency in evaluating the quality of what he is buying. Because of the false pride in U.S. government and under the pretense of fairness (can you believe that?), Paulson and his buddies will spend more than market value, even though the junk value is pretty much zero. If the nation is smart, they will elect a president that will promptly dump Henry Paulson onto the job market heap of life. He will spend up that precious $700 billion in credit before he leaves office. If by some miracle Paulson retains his job, he will come with his hand out to Congress for another hefty chunk with little to show for his efforts.

Confidence will improve modestly, mostly due to investment from global central banks as they need somewhere to invest all that devalued cash. Other foreign investors will watch cautiously, but begin to bet on safer risks for the short-haul. Banks will continue to stand on capital and credit markets will stay tight. The economy will continue to shrink and the market liquidity will continue to logjam.

Joe Citizen will continue to cut back because of inflationary pressures and shrinking income. Credit costs will rise and the cost of capital goods will stall. Pressures on foreign markets will continue to put the squeeze on the business world, especially big business and multinationals. Generally, the poor will get poorer and poverty will spike across the globe.

The global economy will continue to weaken focusing initially in Europe, followed by Asia and the emerging markets that business has come to rely on. This is in process now.

Hopes for a speedy recovery by politicians and lapdog economists will wane as the seeds of what Washington has sown come to full fruit. The unpleasant combination of high inflation and economic stagnation will come to bear on the land of the free, followed by the Europe and the rest of the world.
Continued meddling by the U.S. government, foreign governments and central bankers will continue to reinforce inflation. This meddling, like the bailout before it, will merely prolong the economic pain instead allowing the cycle to work naturally. Economic suffering will be great.

The U.S. government will vainly attempt a fiscal stimulus for taxpayers for give a shot in the arm to the economy. An expansion of the bailout will be too little, too late and with little understanding of the real issues because of a lack of understanding of the real issues. Economic recovery is a long-term prognosis.

The United States will be tempted to default on the national debt. Politicians won’t need to worry much. Central bankers have what they want: control of governments and populations, the economic gross national product to fund their quiet rush to superpower status and a new global currency built under the guise of peace and security. It is a dark scenario that must be walked through except for those central bankers that control the gold.~ E. Manning

August 11, 2008

Banking Healthier Than Last Crisis?

healthy banking or bust
“healthy banking or bust”

There is no end of perspective, outlook or propaganda on the internet. You can surf until your bloodshot eyes can’t see anymore. One news agency will sometimes play both sides of a topic for weeks or months at a time and you can see it for yourself in real time if you are disposed to do so. If you are listening and lame enough to believe everything you read and hear, you are whirling around in your seat from the stress and pressure.

A consistent outlook is that the banking system is healthier than it was during the last crisis. When was that? Assuming we can remember back that far, consider the wonder of the U.S. Savings and Loan debacle. Those were some nasty times and bankers still didn’t learn much except how to create more trouble. Staid economists like this writer know better. But that isn’t the issue.

“Indeed, the recent spate of bank failures seems remarkable only if one compares it to the unusual period of tranquility that preceded it”, a spokesman for the Federal Deposit Insurance Corp., Andrew Gray, said. “If anything, the rate of bank failures is returning to historic norms.”

Between 1986-1995, over 1,000 institutions with total assets of over $500 billion failed. By 1999, the Crisis had cost $153 billion, with taxpayers footing the bill for $124 billion, and the S&L industry paying the rest. At this writing, 8 U.S. banks have failed. Even at worst, the FDIC is projecting that 100 to 200 banks will fail in the next 18 months. This simply doesn’t compare with the S&L debacle, so banking is clearly in better shape.

Naturally, the stellar minds that cooked up that dogma didn’t consider that comparing then with now is like comparing apple and oranges. They are both fruit and they may be overripe, but that is where the similarity ends. Why?

The reality has everything to do with Federal Reserve policy. The Fed has become the official policeman of the U.S. economy and finally the banking industry. In order to keep the economy on its feet and save the banking industry from certain collapse as well as a complete bursting of the confidence bubble, the Federal Reserve has heavily subsidized the banking and finance industry by floating loans in secret to troubled banks across the nation.

The debacle that brought this reality to fruition was not just predatory lending in the mortgage market, but a variety of untested and fraudulently-based banking instruments created by bankers to make more money, largely through the sale of securities for investment purposes. When the market froze up from lack of liquidity, panic and improper management, the economic fraud began to show itself, threatening not just the banks, but the entire economy.

Further, when Bear Stearns neared collapse the entire economy was prepared to go down the sink. To avoid this very real likelihood, the Fed put a new floor in the economy, consistency loaning to banking institutions and protecting them from their own foolish decisions and greed.

The FDIC or the funds that they hold have hardly been touched because the federal government has developed another economic salvation for banking and finance. The reality is that the jury is still very much out on the success that the Federal Reserve has enjoyed in bailing out the banking and finance industry. The cost is already much higher than the previous crisis and has impacted the world. In effect, the federal government through the Fed has bypassed the old system and upped the ante. The whole economy is on the line behind the success of government and Fed actions while inflation threatened to unhinge the system. The health of banking has become a national shell game of sorts: certainly not healthier than the last crisis.

~E. Manning

August 1, 2008

Oasis Wealth & Fraud: Simply Unsustainable

Since World War II, the United States has been the center of global finance. It has used that position to virtually dictate the conditions under which many other nations get access to capital. Letting weak and mismanaged companies fail has been high on the list. As of late, this reality is no longer the case as bailout fever ensues to glorify national confidence.

Henry Paulson, the U.S. Treasury boss, has not reigned in criticism of other countries that have nationalized corporations in the past. Since March, he has been in the position of recommending the same ideal himself. How times change. Fascism has come home to roost in America.

The U.S. economy is a shambles for most, perhaps subsistence at best. However, this does not include the up-and-coming flank of investors and administrators that are tapped into commodities futures. Unhappily, this too is a desert vision of an oasis. Eventually, thirsty investors will be gobbling down sand in an effort to sate their thirst for money and profits. This has already happened with the mortgage crisis. As the environmentalists would say: “this is isn’t sustainable.” The multi-level marketing scheme will become oversaturated and lose its potency. Eventually, the poison of fraud takes hold of those that practice it.

The U.S. is now enjoying the reality of an economic hangover from unbridled credit, financing and speculation compounded by ignorance and mismanagement. Wages haven’t kept pace for what seems like an eternity for all but the wealthiest. This was conveniently ignored as long as the nation thought borrowing would sustain the national lust for the appearance of wealth. The desert vision wasn’t sustainable and now, like the Japanese, Americans are thirstily looking for the next oasis. Surely corporate wealth and the corporate oligarchy will sustain us. Most plans for unbridled wealth are unsustainable. Is yours? ~ E. Manning

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